Shifting strategy for overseas sales

HOW DOES A MACHINE TOOL builder that is dominating the European market translate its strategy for sales success into its U.S. operations? AMERICAN MACHINIST posed this and many other questions to Peter Riehle, president and CEO of DMG America, for his tak

May 31, 2003

American manufacturers demand cuttingedge technology backed up with good service, says Peter Riehle, president and CEO of DMG America.

This Robocasted implant sets perfectly in the jawbone of a manufactured skull.

Photo by Randy Montoya

The perfect fit of the Sandia ceramic scaffolding in the model jaw also recreates the upper line of the original jawbone.

Photo by Randy Montoya

Mori Seiki's Marlow Knabach.

HOW DOES A MACHINE TOOL builder that is dominating the European market translate its strategy for sales success into its U.S. operations? AMERICAN MACHINIST posed this and many other questions to Peter Riehle, president and CEO of DMG America, for his take on everything from the U.S. skilled-labor shortage to the challenges of delivering highend machine tool technology to the American market.

Riehle was educated as a mechanical engineer and worked as a structural engineer in R&D. He later shifted his career into sales and has since worked his way into the top spot at DMG America.

Drawing from his European experience with apprenticeship programs, Riehle shared his perspective on the American skilledlabor shortage, boiling the problem down to the U.S.'s more general — and less apprentice-type — style of education for high school and college students. Couple this problem with a U.S. labor tendency to job hop for $0.25 more an hour and, according to Riehle, there's a crisis in the making.

"Not having apprenticeship programs is a negative for U.S. manufacturing," he says. "Most countries with good programs have a training structure run by the government. Young people need to be led into manufacturing."

DMG and other builders do their best to compensate for the lack of skilled labor in America by making systems user friendly, but Riehle believes that better interfaces are not a cure-all.

"Yes, technology has simplified how shops run equipment, but, at the same time, they now have more machine features to navigate," Riehle explains. "A trained operator simply gets more out of a machine."

New technology is not only a challenge for operators. Manufacturers struggle with decisions about whether to upgrade to better systems or put off technology investments even if they are essential for survival in a competitive global market. For DMG, the challenge is keeping its own R&D on the cutting edge, while also convincing customers that adopting the latest technology is a key strategy for growth. "Keeping machines in front of the customer and on the cutting edge of technology is a daily fight," says Riehle.

As part of its own technology policy, DMG installs only open controls on its machines. It claims that integrated technology helps shops run more efficient, complete cycles. Systems from DMG come with a choice of GE Fanuc, Siemens, or Heidenhain controls, which lets the customer choose the operator interface.

DMG is also proud of its policy to incorporate competitively priced linear-drive technology into its systems. "Linear-drive machines were expensive in the past, but now, to benefit our customers, we have installed linear drives on as many of our machines as possible," comments Riehle.

Maintaining its cutting-edge technology in-house is only half the battle. To push its high-tech product in the U.S., DMG has had to modify its selling practices from those it relied on in Europe.

"When you dominate the market with 70% to 80% marketshare, you don't have to explain yourself to make the sale," explains Riehle. "Here in the U.S., we must prove ourselves and, most importantly, provide service, service, service. This society is consumer-oriented, and that is not true in Europe."

The other primary challenge DMG faces in the U.S. is simply distance. Both service and sales become more complicated in a country with four different time zones. The company is facing these new challenges using strategies such as on-line support/troubleshooting for customers. It also takes advantage of priority shipping services.

In the sales arena, DMG offers technology seminars for potential clients. It has also been successful reaching out to larger manufacturers with DMG technology and having those companies refer suppliers. Relying on distributors, however, is not DMG's primary strategy. Riehle explains: "DMG uses some distributors, but the majority of sales is done directly. The reason for this is the high-tech nature of our products. Our customers would also rather save 10% by buying direct. On the other hand, we realize that many shops hold strong bonds with distributors, and this helps get our foot in the door with potential customers. In the end, I think a hybrid approach to sales is best."

Jaw-dropping success?

A NEW METHOD OF MANUFACTURING bone implants could mean lesspainful surgeries for patients. Researchers from the University of Illinois and Sandia National Laboratories are working on a process that would allow artificial porous implants, such as a lower jaw, to be made prior to surgery to fit perfectly into a damaged region. This would replace today's practice of harvesting bone from a patient's pelvis.

The process, called Robocasting, was originally conceived as a way to more-quickly fashion defense components out of ceramics. Situated on a truck, the Robocasting machine could make replacement parts on a battlefield, instead of carrying millions of parts onto a site.

Controlled by a computer program, the machine dispenses liquefied ceramic pastes, like toothpaste squeezed from a tube, to form shapes of varying complexity along a prearranged path. For the jawbone, the machine dispensed a hydroxyapatite mixture in a scaffoldlike arrangement, in cross-laid slivers each about as thick and as far apart as the diameters of 10 human hairs. Researchers on the project embedded the resulting scaffolds in wax, machined the part to its final shape, and removed the wax.

If approved by the Food and Drug Administration for in vivo testing, the scaffoldlike structure — a layered mesh stronger than bone, yet porous — would substitute for a portion of the mandible, or lower jaw, until healthy, newly grown bone and blood vessels could weave their way through it like vines through a garden lattice. "Bone, blood vessels, and collagen love to grow into a structure with pores of that size [500 microns]," says Joe Cesarano, whose team fashioned the new implant. "The material becomes a hard-tissue scaffold for promoting new bone growth." Sandia and UI researchers recently watched surgeon Michael Goldwasser fit such a ceramic prosthetic into the mouth of a patient who had lost most of the teeth and bone of her lower jaw. The fitting operation was to determine whether the implant — created a thousand miles away at Sandia in Albuquerque — had been accurately designed, from its overall shape down to inclusion of a nerve groove. Observers said it fit like a glove.

Strong support for new business enterpriseSINCE IT ACQUIRED HITACHI SEIKI CO. Ltd. late last year, Mori Seiki Co. Ltd., Nara, Japan, has been busy establishing Mori Seiki Hitech — one could say they've reestablished the organization, although it's more than that. Mori Seiki Hitech not only supports existing Hitachi Seiki customers by carrying on the same traditions, but it has actually enhanced the support and financials behind the machine tools.

In the past six months, the new organization put support operations in place to service both Hitachi Seiki machines as well as new Mori Seiki Hitech installations. "Mori Seiki has invested in this company," says Marlow Knabach, national technology manager, "and it's not going away. We're behind these machine tools — both the existing installations and the new ones. What solidifies that point is our new facility, which will open in Chiba, Japan, in September. We've also spent a lot of resources ramping up parts-distribution in Dallas so that customers can use us as a resource."

According to Knabach, the Mori Seiki Hitech organization will immediately benefit existing owners of Hitachi Seiki equipment. "Mori Seiki Hitech offers renewed support for their existing investments with both replacement parts and the intellectual knowledge behind the machines themselves," explains Knabach. "In fact, former employees of Hitachi Seiki remain an integral part of Mori Seiki Hitech. They assist in daily efforts with design, production, customer support, and disseminating product knowledge throughout our worldwide network."

Mori Seiki Hitech continues to expand all aspects of customer support, including parts, service, training, and applications engineering. One of the company's greatest challenges, however, is overcoming the misconception that Mori Seiki Hitech doesn't supply parts for Hitachi Seiki products purchased outside of the Mori Seiki distribution network.

"In actuality, we consider parts support to be another opportunity to earn the confidence and respect of all Hitachi Seiki users," comments Knabach. "Certainly, the speed of developing such a large-scale support network is never fast enough, but the feedback we are receiving indicates that our capabilities are meeting, if not exceeding, the expectations of existing and newly acquired Hitachi Seiki customers."

He adds that the acquisition of Hitachi Seiki and the subsequent formation of Mori Seiki Hitech are proof of Mori Seiki's commitment to the machine tool industry — and its financial health. "The manufacture of machine tools remains a unique blend of science and craftsmanship, and one of honor in Japan," he explains. "For this reason, acquiring the assets of Hitachi Seiki Co. Ltd was more than a strategic decision based on economics, but one of obligation to the industry as well."

Mori Seiki Hitech recently introduced four machine tools that are a result of its collaboration with Mori Seiki. The four new machine tools take advantage of the capabilities of the Siecos control and include the TF1500 2-axis lathe with a 6-in. chuck; the TF2000 2-axis lathe with an 8-in. chuck, the VS5000 vertical machining center (4020 in.); and the HS5000 horizontal machining center with a 500-mm pallet.